Part of our guide: Disability Income Insurance: Solutions, Tools and Guides →
Most small business owners couldn’t step away for a long weekend, let alone several months. If illness or injury kept them out, the business could close. Business overhead expense (BOE) coverage is designed to keep it open, but owners should understand exactly what it pays for.
Key takeaways
- BOE reimburses the business’s regular fixed operating expenses while the owner is disabled.
- It generally doesn’t cover the owner’s own salary, inventory, or new equipment purchases.
- Pair BOE with personal disability insurance so both the business and the owner’s income are protected.
BOE keeps the business alive. Personal disability insurance keeps the owner’s household running. Most owners need both.
What BOE typically covers
- Rent or mortgage interest on business property
- Utilities, phone, and internet
- Salaries of employees (other than the insured, and often other same-profession employees)
- Equipment leases and loan payments (with some policies or riders)
- Business insurance premiums, accounting and professional fees, and other regular fixed expenses
What BOE typically doesn’t cover
- The owner’s own salary or draw, which is covered by personal disability insurance
- Inventory, merchandise, or cost of goods
- Purchases of new equipment
- Salaries of replacement professionals, unless a special rider is added; see the salary replacement rider for physicians and dentists
Definitions vary by carrier, so review each policy’s covered expenses list.
Why it’s a door opener
Asking “What would happen to your business if you couldn’t work for several months?” opens a conversation most owners have never had. It protects employees, keeps the business valuable enough to sell if the owner can’t return, and premiums are generally tax-deductible. See why small businesses need BOE.
Frequently asked questions
Does business overhead expense insurance cover the owner’s salary?
No. BOE covers business expenses; the owner’s income is protected by personal disability insurance.
Does BOE cover employee salaries?
Yes, generally for employees other than the insured, though same-profession employees may be excluded unless a rider is added.
Are BOE benefits taxable?
Premiums are generally deductible, and benefits are taxable income to the business but offset by the deductible expenses they pay.
Reviewed by Tim Fuller on 2026-09-25
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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